TMI Blog1996 (1) TMI 62X X X X Extracts X X X X X X X X Extracts X X X X ..... , is, as follows : "Whether, on the facts and in the circumstances of the case, the addition of Rs. 26,517 representing interest on sticky advances as income of the assessment year 1978-79 is valid in law ?" The assessment year concerned is 1978-79. The accounting year ended on December 31, 1976. The assessee, a subsidiary, of the State Bank of India, maintained its accounts on the mercantile ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e " interest suspense account " to avoid showing inflated profits by including hypothetical and unreal in come, and such interest on " sticky " advances was not real income and was not taxable in its hands. The assessing authority rejected the claim for deduction of an amount of Rs. 26,517 credited to the interest suspense account, relying on an earlier decision of this court in the assessee's own ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssessee that is taxable. Whether the income has really accrued or arisen to the assessee must be judged in the light of the reality of the situation. (2) The concept of real income would apply where there has been a surrender of income which in theory may have accrued but in the reality of the situation, no income had resulted because the income did not really accrue. (3) Where a debt has become b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h evidence to show that no real income has accrued to the assessee or been treated as such by the assessee. (8) The concept of real income is certainly applicable in judging whether there has been income or not but, in every case, it must be applied with care and within well-recognised limits. Following the above decision of the Supreme Court, the question referred is answered in the affirmative ..... X X X X Extracts X X X X X X X X Extracts X X X X
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